Rs 24-crore hawala and GST fraud busted in Bareilly, 2 arrested

Police in Bareilly have uncovered a major hawala and GST fraud racket involving illegal transactions worth around Rs 24 crore , arresting two men in connection with the case. Hawala is an informal and often illegal system of transferring money without using formal banking channels.

The scam came to light after a small zari (embroidery) artisan received an income tax notice of nearly Rs 1.5 crore for transactions he had no knowledge of, Bareilly (South) Superintendent of Police Anshika Verma said. Investigations revealed that the accused targeted small traders and daily wage workers, offering help to expand businesses or enter export markets. They allegedly collected identity documents like Aadhaar and PAN cards, opened bank accounts in their names, and floated shell companies to conduct large-scale unauthorised transactions.

One such fake firm, Satya Sahab Traders , was created in the artisan’s name, and accounts were opened in both private and public sector banks. “ Around Rs 24 crore in suspicious transactions were routed through this firm within a year ,” the SP said. Other paper-only companies, including Mahavir Trading Company, Mahakal Traders, and Sumit Traders , were used to generate fake bills and invoices to evade GST.

While it initially appeared to be a GST fraud, the movement of funds suggested involvement of a hawala network, police added. A man from Shahjahanpur district is also under investigation.

The two accused, Shahid Ahmed (38) and Amit Gupta (38), were arrested from Bareilly’s Bhuta area, with mobile phones and cash seized. A case has been registered under relevant sections of the Bharatiya Nyaya Sanhita and further probes are underway to identify additional beneficiaries and links in the network.